American Elephants


Pipelines, Fundraisers and Campaign Cash. Canada’s Had Enough. by The Elephant's Child

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The Obama administration has been holding up for six long years, any real decision on the Keystone XL Pipeline that would bring oil from the oil sands of Alberta to Gulf Coast refineries. Approving the project would have provided 20,000 well-paying  construction jobs, boosted the economy and helped to lower the price of oil on the world market, and reduce the influence of Russia and OPEC  in world affairs. The whole project was a huge win-win for both the United States and Canada.

Well, Canada has had just about enough. They are in the process of developing alternatives —one of which is a 2,900 mile pipeline that would carry a million barrels of oil a day from the oil sands region to the ice-free port of St. John, New Brunswick on the Bay of Fundy. There it would be refined and then shipped to customers around the world on supertankers. The Energy East Pipeline is a $10+billion (US dollar)project where an existing oil superport and refinery could export that oil to world markets, including India which is hungry for more energy.

Canada has already approved their Enbridge Northern Gateway Pipeline to Kitimaat British Columbia, a 1177 kilometer pipeline. That one is waiting approval from the many First Nation tribes that it would cross. There is also a 710 mi long Trans Mountain pipeline system operated by Kinder Morgan Energy Partners running from Edmonton, Alberta to terminals and refineries in British Columbia, Vancouver and the Puget Sound region in Washington. Kinder Morgan says expanding the existing pipeline, which they want to do by twelve times, is cheaper than Northern Gateway.

It is hard to over emphasize how annoyed the Canadians are over our failure to proceed on a mutually beneficial project because Obama wants campaign money from wealthy ideologues. Reuters says Canadian crude exports to the United States topped three million barrels per day last week. Much of this oil is moving by rail. Without a pipeline to a refinery and supertanker port, the U.S. is virtually Canada’s only buyer. Canadians are subject to price discounts of as much as $43 a barrel that cost Canada something like $20 billion a year.

The White House’s blockade of the Keystone XL hasn’t stopped domestic Fracking or development of Alberta oil sands. Instead, the industry transports oil and natural gas with 19th century technology — rail. Seven out of every ten barrels from North Dakota’s Baaken shale move by rail, and total carloads of crude have increased 4000% since 2008.

So naturally the president’s regulators are looking at the dangers of trains. The 2003 Lac-Mégantic oil explosion killed 47 people and destroyed parts of the Quebec town, an agency called the Pipeline and Hazardous Materials Safety Administration is imposing new rail tank car design standards. Within three years, most of the 334,869 cars in the North American fleet must be retrofitted with thicker steel jackets, heat shields, better brakes and so on. Regulators, of course, claim to be acting in the name of rail safety, but according to the Federal Railroad Administration (FRA) 99.9977% of potentially dangerous cargo arrives without incident.

Hardening of tank cars might prevent 0.0023% of accidents. Most (88%) of derailments are the result of cracked, split or washed-out tracks and welding. The need is for more track maintenance and inspection. The other major cause of derailment is human error. The real motive seems to be to force tens of thousands of tanker rail cars off the rails and slow the oil and gas development to which the enviros object.

Bloomberg has a long and fascinating article on Canada’s efforts to solve Obama’s intransigence over the Keystone XL, and their own need to bring their mother lode of crude oil to market. With one project, Energy East will give Alberta’s oil sands not only an outlet to eastern Canadian markets, but to global markets. Canadian oil and government interests feel they’re being played by Obama as he sweeps aside a long understood “special relationship” between the world’s two biggest trading partners to score political points with environmental supporters at home. (The Bloomberg piece includes maps that explain the pipelines).

It’s clear that his will be a huge benefit for Canada. The projects span the whole country, uniting Western oilfields with coastal shipping. The Keystone XL may still be built sometime, but failure to deal with our close friend and neighbor to the north in a timely and honest manner has deeply damaged a longstanding relationship and we missed out on jobs and economic growth for the sake of Democrat politics.




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